The further to the left or the right you move, the more your lens on life distorts.

Sunday, May 01, 2022

College Debt

The Democrats' increasingly hard left policy positions don't resonate with broad swathes of the American electorate. Even worse, recent polling (although subtly structured to make Dems look good) show that one of their core constituencies—young people in the 18 to 30 year old age bracket—have become disenchanted with high gas prices, rampant inflation, and a general feeling of malaise that is post-COVID America.

So, the Biden administration has decided to do what many past blue administrations have done—buy votes of key electoral constituencies. In this case, recent college graduates. And what better way to do this than to forgive college loan debt. Of course, the debt is NOT forgiven, it will be paid by taxpayers, many of whom have not gone to college, or have already been responsible and paid off their debt, or by parents who decided not to buy a new house and instead saved until they has enough to pay for their children's college education.

The editors of the Wall Street Journal comment:

Most borrowers don’t need debt relief, but Democrats are hoping to buy themselves political relief before the midterm elections. Young people have soured on President Biden, and Democrats worry they will be as motivated to vote this November as they were to attend a 9 a.m. class. Democrats plan to bribe them to the polls. This week Mr. Biden told the Congressional Hispanic Caucus that he is weighing options, but “you’re going to like what I do on that,” as one Member related.

Federal student loans were established as part of the Great Society to help low-income students. Yet step by step, Democrats have turned student loans into an entitlement for academia and the affluent. Rather than make college free on the front end—which might have failed to pass Congress—they want to waive the costs at the back end.As the loan limit increased over time—now $57,500 a year for independent undergrads and $31,000 for those dependent on their parents—colleges raised their prices to sop up more federal largesse. It doesn’t matter to the schools if their philosophy grads work as baristas.

In 2010 Democrats nationalized the student loan market, eliminating guarantee fees for private lenders and using the “savings” to pay for ObamaCare. They also created income-based repayment plans, allowing future borrowers to limit monthly payments to 10% of their discretionary income and discharge their remaining debt after 10 to 20 years.

And now, the Democrats have decided that those of us who continue to pay income taxes (a shrinking number as the years go by) should subsidize children in the top 25% income group so that they can escape student debt that they willingly entered into and were once obligated to pay back.

So here's a suggestion: 

If students no longer need to repay their college loans, then the colleges that offered the "education" that was paid for by those loans no longer need to benefit from the monies received. For every loan that is abrogated, the college(s) that benefited from the loan income must repay 50 percent of the money to the government. After and only after that money is repaid by the college, the student debtor would have to work in government service for a maximum of three years at a base pay no greater than their average monthly pay for the past 24 months. If the amount earned equals the amount owned in student debt, then the debtor is released from service. Employment of new entry level civil service positions would be reduced in an amount commensurate with those student debtors who go into government service. Of course, this would be voluntary, but if a college refuses to pay and/or a debtor refuses government service, the debt and the obligation to repay it will remain.

Once those two criteria are met, the graduate would be released from debt and the taxpayers would be on the hook for the rest. Still unfair, still unnecessary, but at least the hurt would be distributed among those directly involved.

Comically, colleges would scream bloody murder, government unions (who would be enjoined from collecting dues from the debtors) would join in the chorus, and people like Alexandria Ocasio Cortez would get the vapors.

Of course none of that will ever happen because responsible behavior and a commitment to contractual obligations is a thing of the past.

In response to the WSJ editorial noted earlier, a commenter, "RB", wrote:

Forgiving student loans is wrong on so many levels.  It's an affront to those who have repaid their loans or who worked their way through college.  It's a transfer from those who chose not to go to college to those who did.  It's a regressive tax to subsidize the most affluent (56% of student loans are held by graduate students).   It encourages people to go to college who shouldn't.  It drives up tuition that is already too high by increasing demand.  And, finally, it's a huge source of liquidity in any economy already racked by inflation.

All in attempt to buy votes for November.  Just astonishing how poor the president's judgement is.

Yeah ... all true, but it does show that the Dems really care, but only about certain classes of individuals to the detriment of other classes of individuals, and only when it benefits their election chances.

UPDATE (2 May 2022):

The editors of Issues and Insights comment on the college debt bail out:

Hard-left Democratic Rep. Ayanna Pressley called Biden’s plan “a tremendous victory.” In fact, it is yet another betrayal of working Americans who will now be paying taxes to support rich kids’ higher education.

That’s not hyperbole. If anything, it’s understatement. As a devastating University of Chicago study conclusively shows, wealthy families disproportionately benefit from loan forgiveness programs.

A recent Fox News report summed up the study’s findings: “The top 30% of households would receive almost half of the total dollars of forgiven debt, while those in the bottom half would get a quarter of the money. And the top 10% of earners would get $5,944 in forgiveness (in today’s dollars) while those in the bottom 10% would get $1,070.”

Sound fair to you? And that was for a much smaller forgiveness program than the one now envisioned by Biden.
Congratulations, suckers. You’ll pay for it, not “the rich.”

Pressley and many, many other Dems would be the first to claim that they're advocates "for those at the bottom of the economic ladder." Yeah, of course they are.